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range County encompasses 798 square miles and borders on the counties of Los Angeles to the north, Riverside and San Bernardino to the east and San Diego to the south and the Pacific Ocean to the west. Its population is more than 2.5 million, making it the fifth most populated county in the country. The combined population of Los Angeles, Riverside and Orange counties is more than 14.5 million. The county includes 31 cities characterized as "sprawling" suburbs with no distinct urban centers. The largest population concentrations are in the cities of Santa Ana (13 percent) and Anaheim (12 percent).1 The population has spread considerably into the southern reaches of the county during the past decade, resulting in the creation of new cities.

Compared with the nation as a whole, Orange County has a higher proportion of young to middle-aged residents, and a lower proportion of older residents. It also has a significantly higher proportion of Hispanic and Asian residents, and a lower proportion of African Americans than the national average. Education and income levels exceed the national averages, and the proportion of families living below the poverty level is about half the national average.2 Unemployment in Orange County is also lower than in the nation as a whole. Despite this generally affluent economic picture, respondents report pockets of poverty. The proportion of Orange Countys population covered by Medi-Cal and the proportion without any health insurance exceed the national averages.3

Overall, Orange Countys health status is quite good. Age-adjusted total mortality is about 30 percent lower than the national average.4 Overall infant mortality is 27 percent lower than the national average; among whites, it is 12 percent lower than the national average for whites, and among non-whites, it is 57 percent lower than the national average.5 Given the countys relatively healthy population and history of managed care, it is not surprising that hospital utilization is relatively low. Hospital admissions per 1,000 and hospital days per 1,000 are 21 percent and 36 percent lower than the national averages, respectively.6 Hospital capacity is 21 percent lower than the national average.7 Physician supply, on the other hand, exceeds national averages; primary and specialty care physician supply is 20 percent and 18 percent higher, respectively, than the national average.8

THE HEALTH CARE MARKET

The market for health insurance in Orange County extends throughout Southern California and, in some cases, statewide. In contrast, the market for health services has remained relatively local. The broad market for health insurance reflects health plans corporate strategies and the areas commuter culture. Many of the countys larger employers have operations elsewhere. Most of the health plans operating in Orange County have an Orange County sales force that operates within a statewide or Southern California marketing strategy.

The market for health services is more defined within the county boundaries. Respondents describe separate but overlapping sub-markets in South County, Central County and North County. Each sub-market is home to full-service hospitals as well as physician groups and IPAs. A few provider systems span the entire county, including the St. Josephs hospital system and its affiliated physicians and the newly formed Tenet/OrNda system. Memorial Health Services and MedPartners have providers in South County and North County and are aiming for county-wide coverage. A few provider systems reach into or from Los Angeles County.

No distinct tertiary care core draws referrals from surrounding hospitals. The University of California Irvine Medical Center, Hoag Memorial Hospital Presbyterian, St. Josephs Hospital and Medical Center and Childrens Hospital of Orange County all provide a significant amount of tertiary care. Respondents report that out-of-county migration to tertiary care facilities in Los Angeles and San Diego, such as UCLA, Cedars/Sinai and Scripps, has declined in recent years as local providers built their own tertiary care programs. Some indigent patients reportedly continue to use the public facilities of Los Angeles County.

Plans and purchasers view Orange County as a relatively low-cost health care market, and predict increased efficiency, especially as hospital consolidation continues. There is a strong business orientation to local health care. Health care leaders measure themselves and their competition in terms of premiums; profit margins; the number of capitated lives; per-member-per-month rates; and the split of capitation revenue among plans, hospitals and physician groups.

There was no clear consensus on the value of health services consumers receive. Respondents views of the quality of care delivered within this market vary. Some hospital and physician group medical directors commented on the sophistication of care management techniques at the medical group level, and pointed to these mechanisms as evidence of high-quality care delivery. Others indicated that intensive competition has forced physicians to take shortcuts in care delivery that ultimately may lower quality of care.

LEADERSHIP AND DECISION MAKING

Leadership and decision making are dispersed throughout Orange County. There is no definitive "Orange County way" of doing business and no sense that the county defines itself as a single community. Sources of county-wide leadership are difficult to locate. Health care leadership emanates from specific organizations pursuing their market-driven agendas.

Asked about community leadership, several respondents spoke of decision making at the level of the countys 31 cities. Others spoke about the countys diffuse small businesses as the "fabric of the community." Still others reported that many of Los Angeless prominent residents conduct business and exert influence in Orange County. Members of the local business community reportedly do not play a strong role in health care leadership.

Executives of the major health plans, hospitals and physician organizations operating in Orange County are the key health care leaders and decision makers. Respondents report that leaders of some of these organizations are losing their local focus as their organizations target larger markets. A mix of nationally and locally based business leaders is at the helm of these organizations.

Health care consumers are not unified. The Healthcare Council is an umbrella entity with 73 member organizations focused on community-wide health care issues. It has not enjoyed community-based funding or support from county residents, who reportedly give more to arts charities than to health or social services. Several organizations focus on issues for specific populations, such as Latinos, Southeast Asians and the elderly, but consumer organization and advocacy are considered much stronger in neighboring Los Angeles County.

Respondents said the community generally addresses health care problems, such as the expected curtailment of Medi-Cal-funded prenatal care for undocumented immigrants, through collaboration among a few broad organizations. These organizations typically include provider associations, such as the Health Care Association of Southern California, the Orange County Medical Association and the Coalition of Community Clinics; safety net providers; local government; and a few not-for-profit groups, such as the United Way. Although the communitys approach is not viewed as proactive, community actors have worked together at times to address crises.